The mere word "Bitcoin" sends some people into hiding. But the concept is fairly straightforward on the surface. Bitcoin is a digital form of currency that allows a person to electronically transmit money to someone else without using a financial institution. But savvy investors have learned enough about the technology to invest in it, with several everyday people becoming rich through their investment. But investing in Bitcoin isn't the same now as it would have been a few years ago, so it's important to know where cryptocurrency is going, as well as where it has been.
What Is Bitcoin?
To understand Bitcoin investments, it can help to learn a little bit more about Bitcoin. Created in 2009, the cryptocurrency was set up to take financial institutions out of the money-exchange process. But money can't flow freely without being documented somehow. All transactions are logged in a central location called the block chain, which is a shared public ledger. If you want to get into Bitcoin, you'll first need a wallet, which you'll install on your computer or favorite mobile device. You can then begin purchasing bitcoins, which can be downloaded to your wallet.
How to Invest in Bitcoin
If you're considering Bitcoin as a "get rich quick scheme," you'll need to learn as much as possible before investing. First of all, as with any investment, you'll face risk by putting your money in, especially since even the experts aren't sure what cryptocurrencies will do in the future. Secondly, you won't pick up the phone and call your stockbroker to invest in Bitcoin. You'll simply buy coins and hope they appreciate in value. When you decide to cash-in your investment, you'll trade it for some form of traditional currency, hopefully at a profit.
Minimum Bitcoin Investment
One of the best things about investing in Bitcoin is that you can purchase the currency in fractions up to the eighth decimal place. Each site may have its own minimums, however, so you may need to make a minimum investment to get started. The price of Bitcoin goes up and down, as with traditional currency, but currently Bitcoin.com requires a purchase in the $50 range.
Bitcoin Investment Sites
There are multiple sites you'll need for your Bitcoin investing journey, starting with where you initially buy your bitcoins. Bitcoin.com is one site, but there's also Coinbase and Bitstamp. Once your wallet is stocked, you'll need to monitor the market to determine how your bitcoins are performing. Numerous sources offer Bitcoin tracking, including Cryptowatch and Bitcoin Ticker. When you're ready to cash your coins in, you can use a Bitcoin ATM to turn them into cash, make a purchase at one of the retailers that accepts the payment or trade your coins on one of the sites that sells them. As with any investment, though, deciding the right time to sell is the tricky part.
Things to Consider
Before you put even $50 into any form of cryptocurrency, there are some things to think about. For Bitcoin specifically, it's important to note that the currency has a tendency to make sharp turns without warning. When Bitcoin Cash released in 2017, for instance, the value dropped 25 percent for five days. But it also climbed back up after that drop. The biggest caution you'll find about investing is Bitcoin is simply that nobody is sure how cryptocurrencies will perform long term. There is also a limit of 21 million bitcoins, as set by the founder, and unless that maximum is lengthened, eventually all the bitcoins will be gone. This will either generate extreme demand or lead the currency to lose customers to competitors.
- Yahoo Finance: Meet some people getting rich from bitcoin
- Bitcoin.org: How does Bitcoin work?
- Time: Want to Invest In Bitcoin? Here's What You Need to Know
- The College Investor: THE TOP 10 BITCOIN AND CRYPTO INVESTING SITES
- Fortune: Bitcoin for Beginners: 3 Things to Know Before You Invest
- Investopedia: What Happens to Bitcoin After All 21 Million are Mined?